Companies hope to hop on potash bandwagon

David Whalen
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Newfoundland and Labrador may soon become Canada's third province with a significant potash industry.

The St. George's Basin on the west coast of Newfoundland bears many of the geological characteristics of New Brunswick's Maritimes Basin, an area rich with the valuable nutrient used in fertilizers all over the world. Currently, Saskatchewan and New Brunswick are the only provinces with significant potash mining industries.

The question now becomes if reality will be as sweet as the prospects.

Three local companies are hoping it will be.

Business - Newfoundland and Labrador may soon become Canada's third province with a significant potash industry.

The St. George's Basin on the west coast of Newfoundland bears many of the geological characteristics of New Brunswick's Maritimes Basin, an area rich with the valuable nutrient used in fertilizers all over the world. Currently, Saskatchewan and New Brunswick are the only provinces with significant potash mining industries.

The question now becomes if reality will be as sweet as the prospects.

Three local companies are hoping it will be.

St. John's-based companies Altius Minerals Corp. and Vulcan Minerals Inc., and Cornerstone Capital Resources Inc. of Mount Pearl, are all in the early stages of potash exploration in the area running from Stephenville to Robinsons.

"Geologically, it makes sense that potash should be in the St. George's Basin," said Chad Wells, vice-president of corporate development with Altius.

When refined for usage in fertilizers, potash, a potassium carbonate, strengthens plants and aids water retention. It also improves taste, texture and nutritional value.

Potash is typically stored in evaporite deposits well below ground level. For a project to be viable, the deposits have to be shallow enough to be retrievable at a cost-effective price.

Geologists have long known of the existence of potash on the west coast, but interest in the mineral has been virtually non-existent until recently. Shortages in the global agricultural sector have rendered nearly every aspect of farming more costly.

"A couple of years ago, it didn't have the profile that it does today," said Colin McKenzie, president and CEO of Cornerstone. "The whole agricultural sector is very hot right now."

"It's been a good place to be," Wells said. "The underlying supply and demand fundamentals for potash have been very positive."

This is best seen when looking at the success of the Saskatchewan Potash Corporation, or PotashCorp. In the last year, the company, which owns the rights to roughly a quarter of the world's potash capacity, has become one of the largest publicly traded companies in Canada. Last Wednesday, Potash North Resource Corp. saw its stock soar by 670 per cent after announcing it had won an exploration permit in an area of potash-rich northern Saskatchewan.

Vulcan Minerals has been researching oil and gas prospects in the area for several years, and has also acquired the mineral rights for the northern St. George's Basin. It first discovered evaporite packages 1,000 metres below the surface in 2002.

"When we made that discovery, nobody was really interested in potash," said Vulcan president Pat Laracy. "As a result, nobody has done any real exploration for potash probably in 30 years."

Vulcan is carrying out assessments to determine just how significant the potash deposits are.

"Exactly what's in the evaporite packages can only be determined through drilling," Laracy said."The good news is that we've been able to identify areas with substantial thickness of evaporite rocks.

"How we move forward will be a function of how attractive the prospect looks."

In May, Altius announced it had reached an agreement with Toronto-based Sprott Resources Corp. whereby Sprott will provide $2.5 million in capital over four years in exchange for 60 per cent interest in a mining project. Wells said this removes much of the financial risk for Altius.

"Either way from an Altius shareholder perspective, we get exposed to discovery opportunity on these projects without any risk of capital to our treasury because somebody else is funding the project," he said.

Also last month, Cornerstone announced it had broadened its claim in the Codroy Valley area. Cornerstone is also exploring the area for copper and uranium. McKenzie said that if there indeed are significant potash deposits in the St. George's Basin, Newfoundland's location would offer an advantage.

"The potential advantage of potash mining in Newfoundland is the proximity to tide water and the access to Atlantic markets like Brazil, the U.S., and Europe," he said.

david_whalen@hotmail.com

Organizations: Altius Minerals Corp., Cornerstone Capital Resources Inc. of Mount Pearl, Vulcan Minerals Inc. Sprott Resources Saskatchewan Potash Potash North Resource

Geographic location: Newfoundland and Labrador, St. George's, Canada New Brunswick Saskatchewan St. John's Stephenville Robinsons Northern Saskatchewan Codroy Valley Brazil U.S. Europe

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